On the Ground, Pessimism Persists

According to the "experts," the downturn is all but over.The majority of economists say so. Federal Reserve Chairman Ben Bernanke, Foreign Policy's top global thinker for 2009, apparently feels that way. One of the world's richest investors is betting on it, along with most money managers. The Organization for Economic Cooperation and Development is positive, too.

And yet, as the following two reports indicate, those who are closest to the action on the ground, business owners and managers, appear to believe otherwise [red italics mine]:

"Grant Thornton LLP Business Optimism Index Reports Little Change With U.S. Senior Executives"

Slight uptick in hiring, but majority now believe recession won't end until second half of 2010 or later

CHICAGO - Grant Thornton LLP's Business Optimism Index, a quarterly confidence measure of U.S. business leaders, remained relatively steady at 60.4 in November (it was 60.9 in August 2009). More business leaders say that their companies plan to increase staffing in the next six months - up to 30 percent from 26 percent in August. However, the business leaders' outlook for the future continues to shift, with only one-third (33%) now saying that they expect the economy to come out of recession by the first half of 2010, compared to 58 percent in August 2009.

The survey found that U.S. business leaders' sentiments toward the U.S. economy have decreased slightly, with 53 percent of the respondents expecting conditions to improve over the next six months, down from 58 percent in August 2009. On the other hand, they are more positive about the outlook for their own businesses, with 79 percent feeling optimistic about their companies' growth over the next six months, compared to 73 percent in August 2009.

	11/2008	2/2009	5/2009	8/2009	11/2009
OVERALL Business Optimism Index	35.6	37.6	54.5	60.9	60.4
Believe U.S. economy will improve	13%	17%	45%	58%	53%
Believe U.S. economy will worsen	63%	49%	13%	7%	13%
Very or somewhat optimistic about own business	44%	43%	62%	73%	79%
Very or somewhat pessimistic about own business	57%	57%	38%	27%	21%
Plan to increase staff	15%	9%	20%	26%	30%
Plan to decrease staff	43%	45%	30%	18%	18%

When do you think the economy will come out of recession?
	8/2009	11/2009
Before the end of 2009	15%	10%
First half of 2010	27%	23%
Second half of 2010	35%	46%
2011	17%	19%
Later	7%	3%

* Percentages may not total 100 due to rounding.

About the Grant Thornton Business Optimism Index
The Grant Thornton Business Optimism Index, a quarterly survey of U.S. business leaders, comprises three measures:

• U.S. economy: Business leaders' perceptions of whether the U.S. economy will improve, remain the same or deteriorate in the next six months.
• Business growth: Business leaders' perceptions about the growth of their own businesses over the next six months.
• Hiring expectations: Whether business leaders expect the number of people their companies employ to increase, remain the same or decrease in the next six months.

The survey was conducted between Nov. 3 and Nov. 17, 2009. More than 360 senior executives from various industries responded to the survey. To see all the survey findings, please visit www.GrantThornton.com/BOI.

"Survey: Small Business Owners Mixed on Hiring Outlook" (Pittsburgh Business Times)

The stock market may have rebounded, but 44 percent of small business owners don’t believe the recession will end for them before late 2010, according to a report Huntington Bancshares Inc., Columbus, released Tuesday.

Huntington (Nasdaq:HBAN) surveyed 200 small business owners operating in the Midwest. Huntington operates in six states and is the Pittsburgh region’s seventh largest bank according to deposits.

Respondents gave mixed reports on when — or if — they expect to hire: 24 percent said they would rehire in second quarter 2010, 22 percent said it wouldn’t happen until 2011 and 16 percent don’t expect they’ll ever reach their pre-recession staff levels. Some 29 percent said they laid off staff, 34 percent froze salaries and 33 percent reduced staff hours.

Comments

[roger]

In the worst of times,this type of behavior is not unusual,
I know, I've lived through it, but ask fore tangible and
verifiable evidence and you'll wait until hell freezes over.
The leadership is the biggest promoter of this kind of BS.

[DavosSherman]

No different than 1930

[kevinearick]

90% of what people do in this country does not end up in a productive product, just like the last "depression", when the buggy producers refused to adapt. Extrapolating the future from the past is like driving while looking in the rear-view mirror - slow, laborious, and, ultimately, deadly.

Our product - education, healthcare, government, and finance - consumes resources to produce economic activity toward the end of making us and everyone else fatter, dumber, and slower, relative to our peak productivity years, and, more importantly, relative to surrounding symbiotic systems, which we depend upon to create surplus as input. The days of simply exploiting material deposits, built up over thousands of years, are largely over, until space exploration, in large numbers, is enabled.

There is no lack of work or resources. We have already developed the means to produce more housing, food, and clothing than needed, and we have built up a large stockpile of non-performing assets for conversion. What we need is a capable workforce, and we need it quickly. All of the DC series automation equipment and associated software needs to be ripped out and replaced. The Japanese production and Argentinean social models developed by the multinationals as a solution are proven failures, and the Asia exit plan is about to blow up, because there is no middle-class capacitor there to liquidate as fuel for to continue this business model.

Basically, finance created a shell of make-work government jobs, carved out the real jobs in the center and replaced them with cheap foreign labor, growing the thickness of the shell as a cost of business. Now, the economy is gone, and the inner shell of “permanent” state government jobs are being replaced by a much thinner outer shell of temporary federal government jobs. Greed works right up until it doesn’t. By then, behavior of the masses is inbred, and the looters are off to the next party, Asia in this case.

In a culture of paper pushing, the credit, govt transfer, and family law practices grow more of the same, to the end of enriching the proprietors of the scarcity model, and at the cost of disabling nearly everyone else. Running the economy in reverse, liquidating the private sector down to $10/hr, increasing government servant pay to 6 figures, and issuing million dollar bonuses on Wall Street, bankrupted the American Enterprise System, with accounting tricks to transform long-term debt into short-term “earnings” to support yet more long-term debt.

This process has run its course, the infrastructure is obsolete, and catastrophic collapse entered the NPV window in 1974. The underbrush is completely dry, and we await a match for ignition, while the controlling interests behind the multinational corporations attempt, in vain, to resurrect the nation/state, divide and conquer, command and control, system from the dead. Thank goodness for all those automated multi-million dollar robots; maybe they can come up with a solution.

The Lazarus trick is a good one, but it is done from the bottom-up, and, in this iteration, a few billion people are watching on their computers in real time. The politicians have chosen replacement over temporary exposure, as they stubbornly march in the same direction, while the parade changes course; they have convinced themselves, along with many others, that they are something more than figureheads.

Sometimes it's necessary to put your ego in your back pocket. Unfortunately, most of thes people have nothing but ego, non-performing assets.

[roger]

The experts never saw it coming.The experts glorified competition,
the experts promoted free markets as if free markets promoted
human freedom, The experts vilified, denied, demonized any critic
who paid attention to the materialist concept of history,
and like Stalin they erased the memory of any opponent of the
system. But reality has a strange habit... it always prevails.

[strainer3]

I think what the US government (and other govt's that have followed in their footsteps) has continued to do to try to support the economy is very misguided. They have wasted trillions of dollars bailing out creditors and shareholders of failed institutions with broken business models rather than addressing the structural flaws in the system of too much debt. And this is going to lead to massive problems down the road with regard to our currency and interest rates, in my opinion. And I think that the gold price breaking out to a new high is a strong indication of the reduction in faith and confidence that people have in governments and their fiat currencies. I recently read a good articles called Gold Price Hits Record as Gold Fever Grips Wall Street that discuss the Federal Reserve's easy monetary policies in order to try to prevent any sort of deflation from occurring and to try to reflate assets prices. I think this article is very helpful for any investor to read because they help to explain the investment implications for the dollar, the gold price, and gold mining companies who I believe will continue to benefit from central banks' inflationary programs.